D&O Litigation Will Continue to Increase, Lishner Says

Melisa Lishner, director with Crystal and Company, joined REIT.com for a video interview at REITWise 2013: NAREIT’s Law, Accounting and Finance Conference in La Quinta, Calif.

Lishner discussed trends in D&O insurance litigation.

“Even though federal class actions have slowed down, we anticipate that it is not going to continue,” she said. “With the economy slowly strengthening, you end up with more transactions, which require more documentation, which require either shareholder approval or more scrutiny over those documents. Whenever you have a transaction, you are going to get noticed, and with mergers and acquisitions, you have a 95 percent chance of getting a claim once the transaction is announced.”

Farer further described the trends in D&O litigation affecting REITs.

“There are a number of other issues that appear to be on the rise,” she said. “The first is executive compensation. In the REIT world, every time the shareholders have disapproved of the board’s recommendation, there’s been litigation filed. In addition to that, there’s more development going on now. With development, you have joint-venture prospects starting, and you generally get a lot of litigation out of those.”

Lishner shared advice for NAREIT members regarding D&O insurance.

“Meet with your carriers. Sit down and tell your story. You are the best people to tell the story of how your company is doing and how you expect it to do in the future,” she said.

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NAREIT®, the National Association of Real Estate Investment Trusts®, is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets. NAREIT's members are REITs and other businesses throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses.